BrightSphere Investment (US:BSIG)2025-11-06 12:27Financial Performance - For the three months ended September 30, 2025, revenue increased to $144.2 million, up 17.1% from $123.1 million in the same period of 2024[127] - Pre-tax income attributable to controlling interests for the three months ended September 30, 2025, was $22.5 million, a decrease of 14.4% compared to $26.3 million in 2024[127] - Economic net income (ENI) for the three months ended September 30, 2025, was $27.2 million, representing a 22.5% increase from $22.2 million in 2024[127] - Total revenue for the three months ended September 30, 2025, was $144.2 million, an increase of $21.1 million, or 17.1%, from $123.1 million in 2024[143] - Net income for the three months ended September 30, 2025, was $27.0 million, an increase of $8.0 million, or 42.1%, from $19.0 million in 2024[143] - U.S. GAAP operating income for the nine months ended September 30, 2025 was $74.7 million, compared to $70.5 million for the same period in 2024, reflecting a growth of 3.0%[182] - Total revenue for the nine months ended September 30, 2025 was $391.5 million, up from $337.8 million in 2024, representing a 15.9% increase[182] - Economic net income (ENI) for the nine months ended September 30, 2025 was $70.4 million, compared to $56.8 million in 2024, indicating a 24.8% increase[189] Assets Under Management (AUM) - Assets under management (AUM) at period end reached $166.4 billion, an increase of 38.3% from $120.3 billion in 2024[127] - Total assets under management (AUM) increased to $166.4 billion as of September 30, 2025, up by $46.1 billion or 38.3% from $120.3 billion a year earlier[130][138] - AUM by strategy as of September 30, 2025: Non-U.S. Equity at $35.3 billion (21.2%), Enhanced Equity at $34.2 billion (20.6%), and Small Cap Equity at $31.7 billion (19.1%)[131] - Institutional clients accounted for $135.0 billion or 81.1% of total AUM as of September 30, 2025, compared to $93.0 billion or 79.3% as of December 31, 2024[132] - AUM from U.S. clients was $94.5 billion, representing 56.8% of total AUM as of September 30, 2025, compared to $74.7 billion or 63.7% a year earlier[133] - AUM from EMEA clients increased to $36.4 billion (21.9%) as of September 30, 2025, up from $16.9 billion (14.4%) as of December 31, 2024[133] - The company reported a beginning balance of $151.1 billion for total AUM as of June 30, 2025, with an ending balance of $166.4 billion[138] - The increase in AUM was driven by equity market appreciation and positive net client cash flows over the last twelve months[138] Client Cash Flows - Net client cash flows for the three months ended September 30, 2025, were $6.4 billion, significantly up from $0.5 billion in the same period of 2024, reflecting a $5.9 billion increase[127] - Net client cash flows for the three months ended September 30, 2025, were $6.4 billion, with gross inflows of $11.9 billion and gross outflows of $6.5 billion[134] - For the nine months ended September 30, 2025, net inflows reached $24.0 billion compared to $0.9 billion in 2024, driven by strong gross inflows of $39.4 billion[140] Revenue and Fees - ENI revenue for the three months ended September 30, 2025, was $136.3 million, a 11.5% increase from $122.2 million in 2024[127] - Management fees for the three months ended September 30, 2025, increased by $24.0 million, or 21.4%, to $136.1 million, attributed to a 34.5% rise in average assets under management[149] - Average assets under management for the three months ended September 30, 2025, were $156.5 billion, up from $116.4 billion in 2024[149] - Performance fees for the three months ended September 30, 2025, decreased by $9.9 million, or 98.0%, to $0.2 million due to changes in performance relative to benchmarks[153] - Management fees contributed $136.1 million to ENI revenue in Q3 2025, up from $112.1 million in Q3 2024, marking a 21.4% increase[192] Operating Expenses and Compensation - The U.S. GAAP operating margin for the three months ended September 30, 2025, was 18.4%, down 349 basis points from 21.9% in 2024[127] - Average basis points earned on average assets under management decreased to 34.5 bps for the three months ended September 30, 2025, from 38.3 bps in 2024[148] - For the three months ended September 30, 2025, total variable compensation increased to $31.8 million, up 8.2% from $29.4 million in the same period of 2024[161] - Compensation and benefits expense rose by $15.1 million, or 21.7%, from $69.6 million for the three months ended September 30, 2024 to $84.7 million for the same period in 2025[161] - General and administrative expenses increased by $1.7 million, or 7.8%, from $21.8 million for the three months ended September 30, 2024 to $23.5 million for the same period in 2025[163] - Variable compensation for the nine months ended September 30, 2025 was $93.6 million, up from $83.7 million in 2024, reflecting a 11.9% increase[183] Tax and Interest - Income tax expense decreased by $2.0 million, from $9.4 million for the three months ended September 30, 2024 to $7.4 million for the same period in 2025[176] - The effective tax rate on economic net income for Q3 2025 is 28.0%, compared to 31.9% in Q3 2024[203] - Interest income increased by $0.3 million, or 50.0%, from $0.6 million for the three months ended September 30, 2024 to $0.9 million for the same period in 2025[169] Debt and Financing - On October 30, 2025, the company issued a notice for the full redemption of all $275 million aggregate principal amount outstanding of its 4.80% Senior Notes due July 27, 2026[228] - Acadian LLC has a delayed draw term loan facility of up to $200 million, maturing on October 28, 2028, with the potential to increase to $275 million[236] - The company plans to use proceeds from the term facility to fund the redemption of its $275 million 2026 Notes[237] - The financial covenants require a maximum Consolidated Net Leverage Ratio of 2.5x and a minimum Consolidated Interest Coverage Ratio of 4.0x[239] Market Sensitivity - A 10% change in foreign exchange rates against the U.S. dollar could lead to a change in annualized management fee revenue of $46 million and an annual change in post-tax economic net income of $18 million[260] - A 10% increase or decrease in equity markets would result in a change in annualized management fee revenue of $57 million and an annual change in post-tax economic net income of approximately $22 million[260] - Approximately 13% of AUM, or $22 billion, are in accounts subject to performance fees, with a 10% change in AUM affecting performance fees by about $6 million[255] Cash Flow - Net cash from operating activities increased by $4.4 million, from $59.1 million in the nine months ended September 30, 2024 to $63.5 million in 2025[223] - Net cash from investing activities changed by $57.0 million, from $(48.3) million in 2024 to $8.7 million in 2025[223] Other Financial Metrics - The Leverage Ratio as of September 30, 2025 was 0.0x, indicating no third-party borrowings relative to trailing twelve months Adjusted EBITDA[233] - Acadian LLC recorded accrued incentive compensation of $96.2 million as of September 30, 2025, down from $119.6 million as of December 31, 2024[246] - Approximately 39% of Acadian LLC's ENI cost structure is variable, linked to the profitability of the business after covering operating expenses[254]